OLDWICK, N.J.–AM Best-rated U.S. property/casualty mutual insurance organizations marked one of the more successful years in recent history for the segment, with net income doubling year over year to $42.6 billion, as efforts to combat post-pandemic inflation and a volatile operating market came to fruition.
Net Income Doubles as Underwriting Results Improve
According to the new Best’s Market Segment Report, “Mutual Insurers Resilient Despite Competitive Pressures,” the jump in net income was driven by an underwriting gain of $14.8 billion in 2025, compared with a $7.2 billion loss in 2024. Investment income of $20-billion-plus in both years helped to boost the bottom line. Despite underwriting expenses ticking up 5.8% in 2025 from the prior year, this was partially offset by a modest decline in loss and loss adjustment expenses.
“Mutuals began filing for significant rate increases, restructuring discounts and raising deductibles in years preceding 2025, and the effects of these underwriting actions have bolstered revenue,” said Justin Aimone, financial analyst, AM Best. “Rate adequacy and mutual carriers’ ability to properly price risks also have benefited significantly from the rise of data analytics, enhanced technology and risk modeling.”
Secondary Perils Continue to Pressure Results
Although AM Best’s composite of property/casualty mutuals avoided large-scale hurricane losses due to the muted Atlantic hurricane season in 2025, results were still pressured by secondary perils, such as wildfires, localized floods and severe convective storms. The composite’s policyholder dividend ratio ticked up as well as mutual insurers issued greater dividends than normal, fueled by the improved underwriting results and strong investment returns. Results through the first quarter of 2026 show an even higher level of policyholder dividends, at $5.5 billion compared with $0.5 billion in first-quarter 2025. In addition, net income for first-quarter 2026 more than tripled over the same prior-year period, although results in the beginning of 2025 were significantly affected by the California wildfires.
Smaller Mutuals Tend to Outperform on Pure Loss Ratio
The report also notes that although the larger mutuals in AM Best’s composite, based on policyholders’ surplus, have a substantial impact on the segment’s overall results, smaller mutuals tend to outperform from a pure loss ratio standpoint.
“Many small insurers tend to write in niche or local markets, cultivating strong relationships with independent agents, and typically exhibit higher retentions within the customer base. However, these smaller companies can be more susceptible to weather-related events and volatility, as larger mutuals may have a greater geographical spread of risk,” said Anthony Molinaro, associate director, AM Best.
Other Report Takeaways
Other report takeaways include:
- Year-over-year growth in net premiums slowed to 5% in 2025, shifting closer to historical, pre-pandemic averages as prior-year rates proved adequate.
- For the third year in a row, AM Best-rated mutuals grew their surplus position, with 2025 representing the largest year-over-year increase of $64 billion to $468 billion.
- The effects of social inflation remain a thorn in the side of mutual insurers and the associated liability product lines, with the market for casualty and liability lines hardening further.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=369030.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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